10 things to know about what Bernanke said

Bernanke stressed that European banks had to take the lead in resolving the crisis.

While the housing market is getting better, it's still not improving fast enough.

Incoming data were somewhat disappointing, but it is not clear how to read them.

The Federal Open Market Committee met to set the federal funds rate, a key interest rate. Here are 10 takeaways about what Chairman Ben Bernanke said Wednesday at the Fed's press conference.

1. Low rates don't discourage lending.

Bernanke said because the Fed's monetary policy actually lowers the amount that banks can make by buying foolproof investments such as Treasuries, it pushes banks to look elsewhere for places to put their cash.

"Low rates should make it even more attractive to banks to look for borrowers and to earn the spread between the safer rate and what they can earn lending to households and businesses," he said.

2. Europe is already a drag on the US economy, and it's getting worse.

"Europe has had additional problems, and we've seen some of those effects in financial markets," he said.

But while reiterating some of the steps they had taken to help European banking authorities, including giving them the ability to freely swap euros for American dollars should the need arise, Bernanke stressed that European banks had to take the lead in resolving the crisis.

"We are hopeful that Europe will take additional steps," he said. "But we are prepared in case things get worse to protect the U.S. economy and the U.S. financial system."

The so-called fiscal cliff is a massive decrease in government spending brought on by the government's automatic spending cuts, coupled with a massive tax increase from the automatic January 2013 expiration of the tax cuts passed during the Bush administration and renewed in 2010.

Bernanke said that if Congress fails to act and the combination of tax increases and spending cuts goes into effect, it could have a big impact on the U.S. economy. In fact, the prospect already is casting a shadow on government contractors, who aren't sure whether some contracts will be renewed and are making employment decisions based on that.

"As we move forward in the year, we do anticipate that the uncertainty with the so-called fiscal cliff will have economic effects," he said. "Financial markets don't like uncertainty, particularly uncertainty of this magnitude, and that will be a negative."

Bernanke encouraged Congress to resolve the issue before the fiscal drop-off, and encouraged lawmakers to do more to fix the economy. "We welcome help and support from any other part of the government," he said.

4. Housing is still hurting, not helping.

"Housing often plays a very important role in economic recovery through both construction and related industries, but also because higher house prices increase consumer wealth and promote consumer spending," he said.

The problem is, while the housing market is getting better, it's still improving not fast enough, and that's contributed to the sluggishness of the economic recovery, he said.

"We're not getting the size of the boost that we would normally be getting," Bernanke said.

5. Extending Operation Twist is a major step and shouldn't be discounted.

"The maturity extension program is a substantive step, and additional asset purchases will be considered if we need to take additional measures to strengthen the economy," Bernanke said in the press conference.

Then, he repeated himself later in the briefing. "Again we did take a substantive step by extending (the) maturity program. We're prepared to do more. We need more information about where the economy is going and what is happening in Europe," Bernanke said.

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